4. Capital expenditure of a new investment project is $ 120,000,000; the expected annualnet cash flows generated from the investment are given below. Supposethat the company's cost of capital is 10%, calculate and comment on the accounting rate of return, internal rate of return, and discounted payback period of the project. Years Cash flows($000) DE (10%) 40,000 42,000 1. 0.909 2. 0.826 3 50,000 0.751 52,000 0.683 55,000 60,000 0.621 SV 0.565

4. Capital expenditure of a new investment project is $ 120,000,000; the expected annualnet cash flows generated from the investment are given below. Supposethat the company's cost of capital is 10%, calculate and comment on the accounting rate of return, internal rate of return, and discounted payback period of the project. Years Cash flows($000) DE (10%) 40,000 42,000 1. 0.909 2. 0.826 3 50,000 0.751 52,000 0.683 55,000 60,000 0.621 SV 0.565

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1CMA

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